Dollar for dollar, all 3 companies are competitive for the performance level with various strengths and weaknesses. Reliability trending for CPUs has been stellar for both companies for years, and GPU reliability really comes down to the end-manufacturer, not the chip maker.

AMD CPUs are not as fast or efficient as Intel's offerings, so they have to bring prices down to remain competitive. As for GPUs, it's just AMD undercutting nVidia's pricing, so they have a better performing product at most (if not all) price points. Note that in both cases, AMD's products aren't defective or unreliable, they're just pricing them lower to help sales.

amd makes a high quality product and so does intel, but the key difference is price vs performance. amd's new 8350 might be their flagship model but it does not come close to intels flagship, but where it does shine is in its price region of 200 dollar cpus it could be considered the best choice. amd is more geared atm it would seem to a more of a gamer crowd, and i mean that to say people who do not want to spend more than 200 dollars on a cpu and do not want to spend more than 200-300 on a gpu.

amd cpus are high quality, my 965 was produced in 2008 and its still kicking and as strong as the day i got it, and the performance was what i needed for the past 4 year. All this being said on the gpu side of it the price vs performance is pretty much identical on both sides its a close game, but if you look at the benchmarks for games you play you will probably see a winner in your eyes. So back to your main question no there is no degradation in quality or performance because of the fact that they make cheaper products.

AMD have not such a great advertising technique as Intel, who you see just about everywhere, it uses less power since they make much more.
When you think Intel you think fast, when you think AMD half the world wouldn't know who they are.

I have AMD & Intel rig and the Intel rig shines, AMD can't compete with a company who is stuck in everyone's head.
You think computing, you think Intel.
You don't think AMD.
Thus both company's are fantastic, but you can't compete with a company who is that high up.

AMD products have excellent reliability (as do Intel products). They are, however, not as powerful when it comes to performance. So yes, AMD products simply aren't as good as Intel products.

And contrary to what an above poster said, Intel usually provides superior price/performance, particularly for gamers. There ARE exceptions. People who are almost exclusively casual users (internet, no demanding gaming) but also have a demand for some moderately graphically-demanding tasks (some blu-ray stuff, select HTPC applications, etc.) may find their cheapest alternative is an AMD APU. Similarly, an AMD APU is one of the better options for a laptop that can do a fair job gaming but still has a decently long battery life for other applications. Students interested in 3D design who cannot afford Intel might look into AMD's Bulldozer chips because of the large number of cores despite the low performance-per-core.

But mostly Intel is better & better for the price as well, especially for gamers who want a desktop computer. Certain temporary sales may sometimes change that statement for those looking for a lower-end gaming rig.

P.S. When it comes to GPUs, AMD is, in my opinion, often better than the Nvidia alternative for a variety of reasons. But that's a whole 'nother ball of wax.